New hope for flat buyers caught out by recession
Court rules that man who lost his job can’t be forced to go ahead with purchase
Hundreds of prospective property buyers in Northern Ireland have been thrown a lifeline after a landmark legal judgment ruled that a man who had agreed to purchase a flat during the property price boom cannot be forced to honour the contract.
Yesterday’s High Court decision could mean that despite buyers having signed on the dotted line, if they find it is impossible to complete the sale they won’t be forced to by the courts.
The judgment is good news for thousands of buyers across the UK embroiled in costly legal battles with property developers demanding they complete their property purchases entered into at the height of the property boom.
But it could leave already struggling property developers out of pocket and with hundreds of empty properties in the worst property slump for a generation.
The benchmark judgment was handed down in the court case of Neil Rowe from Co Armagh.
He is just one of hundreds of people across Northern Ireland who bought expensive apartments before the recession hit and then found themselves unable to complete their purchase.
The Portadown building surveyor was taken to court by Titanic Quarter Ltd over his failure to complete on the sale of a luxury £264,000 apartment in the heart of east Belfast at The Arc residential complex.
After Mr Rowe signed to buy the two bedroom apartment in July 2007 he became one of the many casualties of the economic bloodbath, losing his job twice in the next three years. Mr Rowe’s legal team argued that as he was now unemployed, he was unable to get a mortgage from banks and therefore he does not have the finance to complete the sale.
Developers Titanic Quarter Ltd, owned by Dublin-based property company Harcourt Developments Ltd, didn’t agree and asked the court to rule that the jobless 33-year-old should be forced to pay for the apartment.
But Mr Justice Deeny refused to grant an order forcing Mr Rowe to buy the apartment, agreeing with his lawyers that it is impossible, as he has no job and no assets to cover the cost of the purchase.
Mr Rowe’s lawyer, Brian Speers, managing partner of CMG Solicitors, Belfast, welcomed the watershed judgment.
He said: “Our client was never trying to get out of what he knew was a legal obligation, but he was facing genuine difficulties. If the banks wouldn't grant him a mortgage because he had been made unemployed, then clearly he could not complete the purchase.”
Mr Speers said: “It doesn’t mean he is not in breach of his contract. He’ll have to compensate the developer, but he doesn’t have to buy the apartment. It’s much easier to agree compensation — he has already paid £26,500 — he’s likely to lose that. This is not without pain for Mr Rowe, but he does not have to proceed with the purchase of the apartment.
“He hasn’t got away scot-free and there are lots of other people like him, who could afford to pay a compensatory amount but are unable to buy the apartment.
“The courts have thrown a lifeline to people that have been anxious having this hanging over their heads,” he said.
Mr Speers said: “It has significance across the UK. The judge confirmed this is the first time the courts have been able to clarify this, although the principle is well established, but this is the first time it has been tested in the recession, apartment-type cases.
“In Belfast we’ll watch with interest the remaining cases of the Ormeau Bakery, College Court Central even the Obel Tower, and The Boat, and all those developers will look closely at this judgment.”
A spokesman for Titanic Quarter Ltd said: “Titanic Quarter is going to take time to digest the ruling and consider our options before making any further comment on this issue.”